Donald Trump makes more billions as media company soars on Wall Street debut

The Sydney Morning Herald03-27

Shares of Donald Trump’s social media company jumped more than 50 per cent in the first day of trading on the Nasdaq, boosting the value of Trump’s large holdings in the company as well as the smaller...

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For one, they’re betting on a company with vague prospects of turning a profit. Trump Media lost $US49 million in the first nine months of last year, when it brought in just $US3.4 million in revenue and had to pay $US37.7 million in interest expenses.The stock created such a frenzy that Nasdaq briefly halted its trading just two minutes after it began for the day.Credit: APIn a recent regulatory filing, the company cited the high rate of failure for new social media platforms, as well as the company’s expectation th","collect":0,"end_time":0,"defaultTopTitle":"smh.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","BK4516":"特朗普概念","BK4585":"ETF&股票定投概念"},"translate_title":"唐纳德·特朗普在华尔街首次亮相，媒体公司飙升，赚了数十亿美元","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DWAC":0.9},"content_text":"Shares of Donald Trump’s social media company jumped more than 50 per cent in the first day of trading on the Nasdaq, boosting the value of Trump’s large holdings in the company as well as the smaller stakes of fans who purchased shares as a show of support for the former president.Trump Media & Technology Group Corp. merged Monday with a blank-cheque company called Digital World Acquisition Corp. Trump Media, which runs the social media platform Truth Social, has now taken Digital World’s place on the Nasdaq stock exchange.Shares in Donald Trump’s media company have soared on debut.Credit: APBefore trading began, Trump Media had a market value of about $US6.8 billion, a figure that is now, based on the current trading price, over $US10 billion. The shares are trading under the ticker symbol “DJT.” Trump holds a nearly 60 per cent ownership stake in the company, making it worth around $US6 billion on paper, although lock-up restrictions for six months could prevent him from selling or borrowing against his shareholding. In mid-afternoon trade, the stock is 52 per cent higher at $US75.96.The stock created such a frenzy that Nasdaq briefly halted its trading just two minutes after it began for the day.Many of Trump Media’s investors are small-time investors either trying to support Trump or aiming to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock of Digital World more than double this year in anticipation of the merger going through.LoadingTruth Social launched in February 2022, one year after Trump was banned from major social platforms including Facebook and X, formerly Twitter, following the January 6 insurrection at the US Capitol. He’s since been reinstated to both but has stuck with Truth Social.On Truth Social, #DJT and the ticker of Digital World were two of the top trending topics in posts. Truth Social users were posting about being shareholders or seeking tips on how to buy shares.One user urged conservatives to “get behind the DJT stock and sent it over $USUS100 per share” to “drive the liberals insane!” Another declared: “Get yourself a piece of #DJT stock if your (sic) a true MAGA supporter.”A day before, Trump Media CEO Devin Nunes, a former House Republican, said, “As a public company, we will passionately pursue our vision to build a movement to reclaim the Internet from Big Tech censors.”Despite the enthusiasm, investors could experience a bumpy ride. For one, they’re betting on a company with vague prospects of turning a profit. Trump Media lost $US49 million in the first nine months of last year, when it brought in just $US3.4 million in revenue and had to pay $US37.7 million in interest expenses.The stock created such a frenzy that Nasdaq briefly halted its trading just two minutes after it began for the day.Credit: APIn a recent regulatory filing, the company cited the high rate of failure for new social media platforms, as well as the company’s expectation that it will lose money on its operations “for the foreseeable future” as risks for investors.Research firm Similarweb estimates that Truth Social had roughly 5 million active mobile and web users in February. That’s far below TikTok’s more than 2 billion and Facebook’s 3 billion — but still higher than other “alt-tech” rivals like Parler.However, Trump Media has said it doesn’t keep track of some numbers that rivals use as key measures of their performance, such as average revenue per user or active user accounts. It says it wants to focus on the long-term instead of “short-term decision-making.”For the long term, though, sceptics see struggles ahead for a company that’s estimated to have far fewer users than rivals in a business where gaining a critical mass is key.“I think there is a possibility of, sooner or later, the stock price falling by 95 per cent,” said Jay Ritter, a professor and expert on initial public offerings of stock at the University of Florida’s Warrington College of Business.Trump would undoubtedly disagree with that assessment. On Monday, he told reporters that “Truth Social is doing very well. It’s hot as a pistol and doing great.” On Tuesday, he posted “I LOVE TRUTH SOCIAL, I LOVE THE TRUTH!,” on the platform.So far, investors’ bet on the former president and Truth Social have paid off. But the company has acknowledged that there are risks associated with Trump’s outsized influence.LoadingTrump Media, which is based in Palm Beach, Florida, said in a regulatory filing that it “is highly dependent on the popularity and presence of President Trump.” If the former president were to limit or discontinue his relationship with the company for any reason, including due to his campaign to regain the presidency, the company “would be significantly disadvantaged.”Acknowledging Trump’s involvement in numerous legal proceedings, the company noted that “an adverse outcome in one or more” of the cases could negatively affect Trump Media and Truth Social.Another risk, the company said, was that as a controlling stockholder, Trump would be entitled to vote his shares in his own interest, which may not always be in the interests of all the shareholders generally.AP, ReutersThe Market Recap newsletter is a wrap of the day’s trading. 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